Forecast: Eurozone PMI next week – Exchange rate could advance if these disappoint

Pound Euro 2016 Exchange Rate Holds Ground in Friday Trade

Despite the disappointing results of the day’s most influential British data, the Pound Euro 2016 exchange rate looked set to sustain its first week of solid advances in over a month as Friday’s trade session came to an end.

The morning saw the publication of Britain’s September public sector net borrowing score, which revealed that Britain had run a worse-than-expected borrowing deficit of over £10b throughout the month.

Despite this, GBP EUR was able to hold its best levels since the early-October Sterling flash crash, as Euro sentiment was too low to allow the shared currency to advance.

While the pair looks to end this week above the key level of 1.12, next week’s data could see the Pound recover even higher if October’s preliminary Eurozone PMI data fails to impress.

(Previously updated 16:40 BST 20/10/2016)

Pound Euro 2016 Exchange Rate Trends Higher After Draghi Conference

Following the European Central Bank’s unsurprising policy decision in the early afternoon, ECB President Mario Draghi held a press conference and took on the questions of press members and economists.

The Euro briefly soared after Draghi stated that the bank’s policymakers had not discussed extending quantitative easing that month, but plunged back down again when Draghi also stated that policymakers hadn’t discussed tapering QE either.

In fact, Draghi seemed surprised by the rumours of tapered QE, and indicated quite strongly that the bank had not considered it and would not in the future.

By the end of Thursday’s European session, the Euro was trending lower against most rivals as investors reacted bearishly to hints that an expansion of the bank’s easing measures could be announced in December’s meeting.

A surge in demand for the US Dollar following higher bets of a December Fed interest rate hike also pulled the Euro lower, allowing GBP EUR to hover above the key level of 1.12 at points on Thursday afternoon.

(Previously updated 12:52 BST 20/10/2016)

Pound Euro 2016 Exchange Rate Slips on Thursday Morning

After initially holding its ground earlier in the trade session, Sterling began to trend a little lower around midday as investors firmed their positions on the Euro for the European Central Bank’s (ECB) anticipated meeting results.

Sterling trade was ultimately little-changed by the morning’s retail sales scores, which continued to hint to some that GBP value was seeing increasingly little influence from economic stats.

The ECB left monetary policy frozen and essentially repeated the previous meeting’s tone, indicating that quantitative easing would run to March 2017 or beyond as always. Euro movement was little changed after the decision.

(Previously updated 11:23 BST 20/10/2016)

The Pound Euro 2016 exchange rate struggled a little to hold its ground on Thursday after the publication of Britain’s September retail sales report, which disappointed markets with underwhelming scores in every print.

Month-on-month retail sales improved from last month’s contraction of -0.2%, but only printed a stagnant 0.0% rather than reaching 0.4% as expected. The yearly score’s previous figure was revised from 6.2% to 6.6%, but the new score failed to meet 4.8% expectations, slowing right down to 4.1%.

While the scores did not offer Sterling any support, analysts stated that they still showed no real sign of Brexit-influenced slowdown.

Office for National Statistics statistician Kate Davies commented; ‘The underlying trend is one of strength, suggesting consumer confidence has remained steady since June’s referendum.’

After the data was published the Pound Euro exchange rate dipped back below the 1.12 level.

(Previously updated 8:45 BST 20/10/2016)

The Pound Euro 2016 exchange rate looks to end this week a bit better off after Tuesday’s Brexit news gave Sterling a strong boost. While UK data still seems to have a muted effect on GBP movement, upcoming figures could still help the currency hold its ground.

GBP EUR gained around a cent in value on Tuesday and was able to hold near the key level of 1.12 throughout Wednesday trade. The pair has potential to advance even higher if Thursday’s European Central Bank (ECB) news disappoints traders.

So far this week the UK has produced solid inflation and CPI reports. If retail sales numbers for the nation also impress we could see the Pound Euro exchange rate sneak higher still before the weekend.

As consumer spending accounts for around 60% of total GDP, robust consumer spending will be essential if the UK is to avoid falling into recession in 2017 – as several leading economists have predicted will be the case.

Sterling has had a good week so far. Despite beginning Monday with an all-too-familiar limpness, the Pound surged on Tuesday as investor hopes that British MPs would fight for a better post-Brexit trade deal with the EU improved.

Downing Street admitted on Tuesday that an MP vote on the final Brexit agreement was ‘very likely’. This has remained to be Sterling’s key strength factor this week, but the week’s data has also offered some support.

Tuesday saw the publication of surprisingly high UK inflation results, while Britain’s latest employment report was also generally impressive to markets.

September’s jobless claims change figure came in at a lower-than-expected 700, despite analysts expecting 3,200 new jobless claims to have been made that month.

The number of new jobs created between June and August was also better than the expected 70k, coming in at a solid 106k. Some economists were particularly cheered by news that Britain’s overall employment rate had improved to 74.5%, a joint-record high.

As a result of the data, Sterling was able to more comfortably hold its ground above levels of key psychological support throughout Wednesday trade.

The Euro had performed strongly out of the gate this week as market speculation that the European Central Bank (ECB) could taper its quantitative easing program earlier than expected lit a fire underneath Euro trade.

Commentary from some analysts claimed that the ECB was beginning to question the effectiveness of ultra-eased monetary policy, leading to speculation that policy would soon start to become more normalised. This would also benefit Eurozone banks which had been struggling, they argued.

However, a consensus among economists on Tuesday indicated that most believed the bank would continue its QE program until at least its natural end-date, and was still likely to extend the program to the latter half of 2017.

As a result, investors have readjusted their positions on the Euro throughout Wednesday on more dovish expectations for the ECB’s Thursday meeting.

The day’s Eurozone ecostats were relatively low-influence but didn’t exactly give the Euro any support either. According to the Eurozone’s August construction output report, construction slowed right down from 3.1% to 0.9% year-on-year.

Pound Euro 2016 Exchange Rate Movement Relies on Thursday’s ECB News

Thursday’s European session is to be vital for the Euro, which could see significant movement in response to the European Central Bank’s (ECB) October policy decision.

Analysts do not expect the European Central Bank (ECB) will take any action on monetary policy and a vaguely optimistic outlook on future policy as usual is expected, with the usual ECB President Draghi’s reminder that the bank will do whatever it takes to stimulate the economy.

If the bank takes this stance, the Euro may slip due to disappointment from investors who still believe the ECB could taper quantitative easing early. However, if the bank happens to take a more optimistic tone than expected, the Euro could hold its ground or even advance.

The shared currency could also feel pressure throughout the day from its rival, the US Dollar, as global markets react to the events of Wednesday night’s final 2016 US Presidential debate. The day’s Eurozone ecostats are unlikely to cause much movement.

GBP EUR has a solid chance to end the week near its current levels or even higher if the ECB disappoints investors. Sterling could also be supported if Thursday’s UK retail sales figures for September come in above expectations.

Despite this, the Pound Euro 2016 exchange rate still remains around five cents weaker on the month and close to low values not seen since 2011.